Why Did Justice Dept. Lose 30% of Tax Prosecutors in One Month?

The federal government’s effort to crackdown on tax evaders using overseas banks has become hampered by the sudden loss of almost one-third of its tax prosecutors can civil litigators.

Within the Department of Justice, 25 of the 95 attorneys in the tax division left Washington for six-month “details” with U.S. attorneys around the country. Three other prosecutors took permanent assignments elsewhere. The transfers were apparently made to fill gaps caused by the federal hiring freeze.

Many of these lawyers were investigating foreign banks or financial advisers suspected of helping U.S. clients avoid paying the Internal Revenue Service. At least 11 Swiss financial institutions, including Credit Suisse Group AG, have been under scrutiny.

“To move one-third of these people from that effort will significantly compromise such enforcement at the very time it is needed to deal with the huge amounts of offshore cases coming to the tax division,” Nathan Hochman, a former assistant attorney general who oversaw the tax division under President George W. Bush, told Bloomberg.

President Barack Obama has twice tried to find a replacement for Hochman. His first nominee, Mary L. Smith, was blocked by Republicans in the Senate. She would have been the highest ranked Native American ever to serve in the Justice Department. Obama nominated his second choice, Kathryn Keneally, on September 8, 2011, but she is still awaiting confirmation.